All Forum Posts by: John Evan Miller

You cannot just convert a tenant to week to week. This would be in violation of the existing lease. You can talk to the tenants and see if that option would be more appealing and then void the first lease and then issue another one. If that happen, I would make sure that the term on the second lease would not be longer than the term on the original lease.

I personally would recommend investing in discounted single family residences. Here is why I think it works in this economy.

1. Distressed properties (Foreclosures, short sales, REO etc) are readily available and are being sold for cheap.

2. Because of the restrictive lending requirements, loans are hard to get forcing many people into renting. If given the choice, people like renting homes more than apartments.

3. As the economy improves and lending requirements relax a little, these renters are going to want to buy.

4. As demand increases and the economy improves, so will real estate prices.

My research indicates that if done properly, the yields will be between 15 - 20%. I estimate the holding period to be no longer than 5 years.

Those last posts make this an even risky investment. If you like the area, no doubt if you are patient, you will be able to locate a suitable investment property that will give you a better net operating income, cash on cash and return on your investment.

If you are leery of MF investing, you can always look into other SFR. These can be highly discounted due to the foreclosure market. Due to the high rental demand, your rents should be good and the resale value is quite appealing.

I would highly doubt that a bank would "discount the note as a favor." They are in the money business. Sorry. If it is a little local bank, you may have a better chance but do not hold your breath.

Okay, that being said, let's look at your options. Yes, you are underwater and that stinks... but, if this property is an investment property, does it cash flow? Can the rent cover the mortgage payment? If so, then it maybe worth sitting on the investment and wait until the prices rebound than to sell the property and take a physical financial loss. Right now your loss is basically on paper. As long at the loan does not balloon, property values should rebound before you pay off the loan.

If the property has a negative cash flow, then you could approach your lender and see if they would consider a short sale. This is have an impact on your credit rating and will prohibit you from getting another bank loan for several years. I see this as a last resort option.

If this is your personal residence, then try not to think about the $30k loss and, as long as you can make the payments, relax and enjoy your property. Values will go up. It is never a good idea to sell at the bottom of the market. There is no money in it, only losses.

If you qualify to get your brokers license, I would definitely go for it. As a part-time investor, you would be your own boss and the commissions will be 100% yours. No more mandatory company meetings, expense splits for something you do not even use, etc. I think you will really like the freedom.

Go over your leases with a fine tooth comb and see what types of clauses are in there that allow for cancellation of the lease agreement in the event of a tenant violation.

I know that you hate to play hardball, but if they fail to keep the unit clean according to the lease requirements, you can serve them notice to either comply with the lease or leave. It may get a few tenants out early.

In my opinion, if you have $130K+ in cash to put into real estate, you are going to make a much greater return by investing in the 2-4 family market. You will be able to get a residential loan at low interest, you use bank leverage to get a higher return and your cash flow will be much higher.

If you cannot find a valid, legal reason to get out of this contract, then I believe the worst that could happen is that you will lose your earnest money deposit. I would cut my losses and find a more profitable property to learn from. You will be much happier and wealthier in the long run.

To be honest with you, I have seen a lot of posts here in BP that express the disappointment that can come from a paid mentor. You have to be really careful here. There are quite a few out there that just take your money, throw you a few impractical tips and set you lose.

On the other hand, if you get your real estate license and then work with a reputable agency, you will get a lot of hands on training - and get paid to get it.

Here is another option: Let the team here in BP be your mentor. This forum is full of seasoned investors who are willing to give good sound investment advice. If you got questions - someone here will have the answers.

Here is what my latest research has revealed:

The latest Fannie Mae guidelines state that after a deed-in-lieu of foreclosure, preforeclosure sale, or short sale, there is a mandatory waiting period of two years for a loan with an 80% maximum LTV (loan-to-value ratio), or four years for a loan with a 90% LTV. If the borrower can document extenuating circumstances, the waiting period for a loan with a 90% LTV drops to two years.

FHA requires borrowers who weren't paying their mortgage when they sold their house to wait three years before they can qualify for a home loan. That time penalty may be waived in certain cases, including long-term job loss. There is no FHA time penalty for homeowners who made their house payments in the 12 months before their short sale. The size of a down payment can also shorten the waiting period.

The USDA loan program is a popular option for people who have had a short sale or foreclosure in their past because it is one of the mortgage programs with the shortest waiting periods and most flexible underwriting guidelines. The waiting period for a USDA loan after a short sale can be as little as 2 months in the right situation. Requirements include: Credit Score of 660 or higher and no late payments for the past 12 months (this can be a real clincher).

Of course, each case is unique and requirements have a sneaky way of changing.

Another problem with selling renovated properties is that sometimes the property is overpriced. Unless the property was purchased at a very high discount, you typically will not recoup 100% of your investment dollar.

Remodeling Magazine states these facts: A minor kitchen remodel will, on the average, give you a 72% return on your investment. A major kitchen remodel averages only 66%. Bathrooms get 62%. A master suite addition will get you a whopping 59%.

Any seller needs to know the market value of the property "As Is" and "After Renovation" to see if there will be any money in the proposed renovation.

Check out this link for more information: http://www.remodeling.hw.net/2011/costvsvalue/national.aspx